Mark Cuban Explains Why He Keeps a Significant Share of His Wealth in Cash

Entrepreneur and investor Mark Cuban maintains an unusually high cash position, a strategy he says protects his wealth and preserves the flexibility to seize opportunities when markets turn volatile. His approach contrasts with the common advice promoted by many personal-finance influencers, who encourage putting most surplus income into stocks, bonds or other long-term assets.

Keeping cash on hand is not a concept unique to Cuban. Berkshire Hathaway, led by Warren Buffett, ended 2024 with roughly $325 billion in cash and cash equivalents, about twice the amount it held at the close of 2023. Buffett’s sizable reserve allows him to act quickly when he deems an asset undervalued. If a company’s share price falls sharply, few corporations have enough liquidity to purchase a large stake without first liquidating other holdings. Berkshire’s balance sheet gives Buffett the agility to move immediately.

Cuban applies the same principle at a personal level. He argues that unpredictable events—whether political developments, economic shocks or technological breakthroughs—can rattle markets without warning. By holding a large cash buffer, he avoids selling assets in a downturn and stays ready to buy when prices appear attractive. The approach, he says, reduces exposure to sudden drawdowns and provides peace of mind during turbulent periods.

A high-profile example occurred on Jan. 27, 2025, when shares of Nvidia fell 17% in a single session, erasing almost $600 billion in market value and marking the largest one-day decline for a U.S. company. Although the stock recovered quickly, Cuban opted not to purchase shares, citing lingering uncertainty around the long-term outlook. His cash position meant he did not need to chase the rebound or worry about margin calls while the market digested the drop.

Earlier periods of volatility have influenced his stance as well. During the Trump administration, tariff announcements periodically shook global equities. On several occasions, Cuban refrained from deploying capital, preferring to watch the policy landscape settle before committing funds. The decision reflected his broader view that avoiding losses can be more powerful than seeking outsized gains.

Cash reserves can serve other purposes beyond cushioning against market swings. Investors with readily available funds can act quickly on non-equity opportunities, such as a discounted property, a private business stake or a collectable item that may appreciate over time. Without sufficient liquidity, acquiring such assets often requires selling existing positions—potentially at inopportune moments and triggering tax consequences.

For everyday savers, replicating Buffett’s or Cuban’s exact allocation may be unrealistic, yet financial planners generally support maintaining an emergency reserve. The specific amount varies by household, but a common guideline suggests covering three to six months of essential expenses. Cuban exceeds that benchmark, allocating a “large portion” of his portfolio to cash, though he has not disclosed a precise percentage.

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Cash holdings do carry trade-offs. During prolonged bull markets, idle funds typically underperform stocks or bonds, and inflation erodes purchasing power. Nevertheless, Cuban and Buffett accept those costs in exchange for optionality. In Buffett’s 2024 shareholder letter, he reiterated that while Treasury bills yield less than equities over time, liquidity enables him to strike when circumstances favor buying—an approach sometimes labeled “dry powder.”

Market watchers note that elevated cash balances have become more attractive since the U.S. Federal Reserve lifted short-term interest rates from near zero in 2022. Yields on Treasury bills and high-yield savings accounts now exceed 4%, offering investors a modest return while retaining flexibility. The current rate environment, detailed by the Federal Reserve, reduces the opportunity cost of holding cash compared with previous years.

Cuban’s philosophy underscores a broader debate in personal finance: how to balance growth potential with risk management. While many advisors advocate systematic investing through dollar-cost averaging, Cuban emphasizes the psychological comfort and strategic advantages of liquidity. His approach may appeal to investors wary of short-term volatility or those seeking to capitalize on sudden market dislocations.

Ultimately, Cuban prioritizes capital preservation and optionality over aggressive allocation. Whether markets rise or fall, he believes having ample cash lets him remain patient, make deliberate decisions and avoid forced selling—a strategy he considers fundamental to sustaining long-term wealth.

Crédito da imagem: Peter Burns